• The troubled MtGox Bitcoin exchange has filed for bankruptcy protection in Japan. (AAP)
MtGox, which froze withdrawals earlier this month, claiming there was a bug in the software that underpins Bitcoin, has filed for bankruptcy protection.
Source:
AAP
28 Feb 2014 - 8:56 PM  UPDATED 28 Feb 2014 - 10:34 PM

The troubled MtGox Bitcoin exchange has filed for bankruptcy protection in Japan, saying it had lost nearly half a billion dollars worth of the digital currency in a possible theft.

Mark Karpeles, who has not been seen in public for several days, re-emerged to tell a press conference that his firm's digital vaults had been almost completely emptied.

"We have lost Bitcoins due to weaknesses in the system," the France-born Karpeles said in Japanese.

"We are really sorry for causing trouble to all the people concerned," he said, before bowing deeply.

The company's lawyer said 750,000 Bitcoins belonging to customers had gone, along with MtGox's own store of the currency, which she said was around 100,000 units.

That number of Bitcoins would be worth around $US477 million ($A534.27 million), calculated against the price on the Coindesk exchange at 1030 GMT. (1100 AEDT)

The global Bitcoin community was shaken this week by the shuttering of MtGox, which had frozen withdrawals earlier this month because of what the firm said was a bug in the software underpinning Bitcoin that allowed hackers to pilfer them.

Supporters rallied round, insisting that the Bitcoin itself is sound and the problems lay with MtGox, which they said was badly-managed and unable to cope with the burgeoning popularity of the young currency.

Kolin Burges, an investor who has kept vigil outside the Tokyo offices of MtGox for several weeks, said on Twitter that he would be packing up.

"Karpeles in Tokyo says MtGox is bankrupt. 750,000 customer bitcoins stolen & 120,000 company bitcoins stolen. None left #mtgox#mtgoxprotest' he tweeted.

He later added: "Packed up #mtgoxprotest for the last time and did leaving interview with Asahi TV. It's been a wild ride!"

The admission that such a huge amount of the crypto-currency has disappeared could add to calls for regulation of an industry that has taken regulators and bankers by surprise.

Japan's finance minister said earlier Friday he had always thought Bitcoin was suspect and said the country might take action following the MtGox debacle.

Taro Aso's comments came as Vietnam said it was banning banks from using the unit and after chief US central banker Janet Yellen said the Federal Reserve had no powers to control it.

Aso, who also serves as deputy prime minister, said he had foreseen difficulties for the crypto-currency, which is generated by complex chains of interaction among a huge network of computers around the planet.

"I was thinking that this sort of thing won't last long," said Aso, 73. "I was thinking it would collapse sometime."

"Japan is overwhelmingly advanced in this field. In this sense, I was thinking since before that we might face a situation where Japan has to act, but I'd say it came earlier than I thought."

His comments come after Yellen told a Senate hearing that banks under the Fed's regulatory purview were not involved with Bitcoin, and so it had no powers in the matter.

"This is a payment innovation that is taking place entirely outside of the banking industry," she said.

"The Fed doesn't have authority with respect to Bitcoin."